Company has $22B USD in assets, but is unlikely to be willing/able to sell them for different reasons

Nokia Oyj. (HEX:NOK1V) was once number one in the phone market. Number one in smartphones sold. Number one in total phones sold. But in 2010, the company was faced with a dilemma. Its smartphone operating system, Symbian, was growing at a steady pace. But overall, it was being outpaced in growth by Google Inc. (GOOG) Android and Apple, Inc.'s (AAPL) iOS. Nokia feared that clinging to Symbian could spell a slow death. So the company's board made a bold gambit and turned to former Microsoft Corp. (MSFT) executive Stephen Elop for a change of pace.

Mr. Elop in January 2011 gave an impassioned speech labeling Symbian as a "burning platform". Those words proved prophetic, though it’s open to debate whether he created a self-fulfilling prophecy. Nokia went on to proclaim Microsoft's Windows Phone as the platform of the future, leaving Symbian in an awkward spot. Whether Symbian's subsequent tumultuous plunge was due to Nokia's abandonment or to customers' turning to better products in the form of Android and iOS is a hotly debated issue.

Microsoft may be forced to douse partner Nokia's "burning platform" in
a healing stream of cash. [Image Source: Mobus]

The new report quotes a "veteran technology banker" as commenting, "I don't see Microsoft owning Nokia, but it would definitely provide financing to the tune of a couple of billion dollars."

Another banker was cited as stating that Microsoft was unlikely to purchase Nokia, but was likely to either take an equity stake or offer a generous inter-company loan. A third banker was quoted as stating that other top phonemakers aren't terribly interested in vying with Microsoft for a controlling interest in the Euro giant who recent saw its credit downgraded to junk. Comments the third source, "I don't see it as a target for private equity either. It is still too expensive and too volatile. You would have to be prepared to catch a falling knife."

The financial veterans say that Microsoft has strong vested interests in keep Nokia's assets off the auction block. Not only does the firm provide Microsoft with a key smartphone hardware partner, but its intellectual property could prove a threat to Microsoft if it fell into the right hands.

II. Rich Assets Unlikely to be Sold for Different Reasons

The company's phone patent portfolio, is very strong -- particularly given it is less reliant on the kind "fair, reasonable, and non-discriminatory" (FRAND) patents that pack the portfolios of such phone making giants as Samsung Electronics Comp., Ltd. (KSC:005930) and Motorola Mobility Inc. (MMI). FRAND patents are a lovely premise -- industry players cooperating for the betterment of customers and science/technology -- but in the harsh realities of today's hyper-litigious legal atmosphere, they're essentially relegated to junk status. Thus Nokia's strong collection of non-FRAND IP makes it a dangerous player.

The phonemaker represents a key threat IP-wise to Apple and the Android alliance. But it could also prove a godsend to Google, if its IP were to be put on the auction block. That would be a nightmare scenario for Microsoft, who allegedly has a rather weak smartphone portfolio, but which has shaken down a number of top Android device makers in what multiple Android allies claim is a brilliant bluff (Microsoft refuses to reveal what patents it is threatening to sue Android phonemakers over until after they license).

Microsoft would likely rather pay Nokia off than allow its patents to be sold to rival Google.
[Image Source: AndroidModo]

Some investors hint that it was a mistake to bring Mr. Elop and Microsoft into the house. States John Strand, founder and CEO of Danish consultancy Strand Consult, "Elop was not hired as a boss for a burning platform. He put the platform on fire."

Perhaps he's right, but the facts are about as ambiguous as possible -- when Mr. Elop took over Symbian was growing in unit sales, but seeing its market share burn away. Again it's impossible to say whether everything that's happened since -- plunging sales, the sluggish transition, etc. -- is solely Mr. Elop's fault.

Nokia CEO Stephen Elop [Image Source: Mark Vlander/Getty Images]

But it's also hard to completely absolve the tech veteran of some degree of culpability. His precise measure of guilt in Nokia's mess is a hot topic among analysts, but their analysis should be recognized as nothing more than educated opinion.

Whatever set the fire; it's certain that Nokia has now been badly burned. And if there's one thing the analysts seem to agree on, it's that a Microsoft intervention may be vital and necessary for Nokia's survival.

Symbian was doomed and it has nothing to do with Elop. Look at blackberry. They didn't abandon their platform but they're still going down the drain. Anything but a top notch user experience is being foregone by consumers. Who the heck was talking about symbian even before it was dumped? How much interest was there in it? Answer: NONE. The world was only talking about the iphone and android and NOTHING ELSE. It's partly due to the economics of software: the marginal cost of reproduction is zero so the top dog is always capable to price competition with lesser players. The one thing they did wrong was to reveal to the world that they were going to abandon Symbian. They should have kept that secret until after the fact.

"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer